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The Challenge of War 


An Economic Interpretation 


By 

NORMAN THOMAS 


League for Industrial Democracy 
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THE CHALLENGE OF WAR 


AN ECONOMIC 
INTERPRETATION 


By NORMAN THOMAS 

M 

Director, League for Industrial Democracy 
Contributing Editor of the World Tomorrow 
and The Nation 


Copyright, 1923, by 

LEAGUE FOR INDUSTRIAL DEMOCRACY 

70 Fifth Ave., New York 

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INTRODUCTION 


T HE evils of our present social order are many in num¬ 
ber and serious in their effects. But the security and 
permanence of our civilization are menaced by two 
things in particular: (1) the waste of materials and men in¬ 
herent in the system, and (2) the constant threat of war which 
grows out of the system. The first evil suggested Stuart 
Chase’s pamphlet, The Challege of Waste; the second suggests 
this companion pamphlet in the L. I. D. series of social studies. 
Like all our pamphlets it has had the benefit of the advice and 
criticism of many friends of the L. I. D. to whom our thanks 
are due. 

It has been written in grave and anxious days. No man 
can foretell what will eventuate from the French occupation of 
the Ruhr even before this pamphlet is in print. The possibili¬ 
ties for evil in the still unsettled Near Eastern situation are 
only less grave. 

At first sight both these crises seem to illustrate the madness 
of the nations rather than the working out of economic interest. 
Behind the war in the Near East lay the age-old feud between 
Greeks and Turks, racial and religious, with its resulting com¬ 
plex of fear, pride, ambition, and desire for revenge. Behind 
the Franco-German crisis lies not only the history of centuries 
of conflict but the fresh memory of the devastated areas of 
northern France. If the popular desire in France for security 
is an abnormal and unreasoning obsession which tends to deteat 
its own ends it is at least not surprising under the circumstances. 

But if these crises illustrate the appalling psychology of com¬ 
peting nations it is increasingly evident that the destructive 
forces so much in evidence have been loosed or augmented by 
the desire for private or national profit. Great Britain and 
France played with Greek and Turk passions for their own 
ends and those ends were control of concessions and trade 
routes. The nearest approach to real unity between the former 
allies and present rivals in regard to the Near East seems to be 
a common disposition to protest against the Chester concession 
which the Turks gave to citizens of a third power! Not con¬ 
siderations of humanity but of power and profit have been 
dominant in the action of all nations concerned. 

So, too, were direct economic interests operative in the Ruhr. 
French industrialists generally united with French militarists 
in a desire to cripple Germany by striking at her economic life. 


French steel and iron interests in particular wanted the major 
control of the coke of the Ruhr. The absurdity of the barriers 
between Lorraine iron and Ruhr coal were evident to them 
but they saw no way to beat them down but by the mailed fist 
for the sake of their own aggrandizement. 

On the other hand it was Britain’s interest (having stripped 
Germany of her colonies and fleet) to see Germany restored to 
prosperity for the sake of trade. British steel men do not want 
a European steel trust dominated by either French or Germans. 
Hence Britain’s aloofness which might have taken more posi¬ 
tive form had not Bonar Law been deterred by the possibility 
of an uncomfortable understanding between France and Turkey 
in the unsettled East. 

If a short sighted economic interest precipitated the crisis 
it is equally plain that the enormous costs of the occupation 
of the Ruhr to France as well as to Germany inspire the 
present tentative approaches to a settlement. It would seem 
that even politicians may be learning from hard experience 
what Norman Angell proclaimed to a doubting world ten years 
ago: “the powerlessness of a completely preponderant victor 
to seize great wealth from the vanquished.” But as Mr. Angell 
has pointed out, to realize that fact does not of itself remove 
the threat of war from the rivalries of capitalist nations. The 
profit motive does not make men or nations clear visioned. The 
psychology of capitalism makes rather for a stubborn insistence 
on collecting debts or reparations at no matter what cost— 
witness America’s reluctance to offer to forgive European 
debts for the sake of a better economic settlement. 

It is especially significant that not the statesmen of capitalist 
principles but the labor and socialist movements have been the 
ones to proclaim most clearly both the economic folly and the 
social cruelty of the occupation of the Ruhr. It is the workers 
of Germany, moreover, who have won at least a partial victory 
by non-violent means. They have proved that you cannot 
mine coal with bayonets. These considerations combined 
with the war weariness of the nations make it possible—but 
by no means certain—that there will be some sort of temporary 
adjustment of the Ruhr question without war. True peace 
will not be established while the conflicts in interest seen vividly 
in the Ruhr and in Asia Minor are characteristic of our social 
system. Norman Thomas. 

April 17, 1923. 


The Challenge of War 


MIDST the dangers that menace the peace and well¬ 



being of mankind, there is this gain: Men are be¬ 


ginning to learn the truth about the stupendous dis¬ 
aster to the human race which new world war will 
bring upon it. The possibilities of disaster increase with 
every new discovery of science. Major General Swinton, of 
the British Army, according to the London Nation, thus 
summed up the nature of the next war: 

We have light rays. We have heat waves. Mr. H. G. Wells 
in his “War of the Worlds’’ alludes to the heat waves of the 
Martians, and we may not be so very far from the develop¬ 
ment of some kind of lethal ray which will shrivel up or 
paralyze or poison human beings if they are unprotected. . . 

The final form of human warfare, as I regard it, is germ war¬ 
fare. I think it will come to that and so far as I see it there 
is no reason why it should not if we mean to fight.* 

The General’s remarks antedated the Washington Confer¬ 
ence on the Limitation of Armaments at which an effort was 
made to limit the use of poison gas and submarines. This 
effort, as was pointed out by more than one speaker in the 
United States Senate at the time when the Treaties were 
adopted, is bound to be futile. If conditions come to a point 
where nations fight, each nation will feel obliged to use the 
utmost resources of science as a “defensive measure” against 
an enemy which will be engaged in the same attempt. For 
the nations to ban poison gas by agreement is as absurd as 
if the chivalry of Europe had agreed to ban gun powder in 
the early days of that explosive. Men say that it is Utopian 
to talk of abolishing war. It is far more Utopian to imagine 
that the destructiveness of war can be kept within metes and 
bounds. It is easier to kill the tiger than to file down his 
teeth.** 


*The World Tomorrow, July, 1920. 

♦♦Since the above was written Admiral Sims has explained 
that Germany used submarines as humanely as was possible if 
they were to be used against merchant ships at all, and that 
the United States would have used them as* Germany did in like 
extremity—a statement which furnishes food for thought on the 
falsity of much allied propaganda and the folly of hoping to 
eliminate submarines or restrict their use in future wars. 





Will Irwin in “The Next War” has described for us in 
unforgettable language the waste of great cities, the ruin of 
fertile fields, the destruction of life, bound to follow a new 
war. But Mr. Irwin’s picture of the charnel house which 
new war will make out of great nations does not tell the 
whole story. There will be survivors even of new world war. 
But no one can foretell how much the race will be weakened 
biologically by slaughter which sparing neither women nor 
children singles out as its special victims the strong and fit. 
Those who were not physically fit to be soldiers in the front 
line trenches will be the fathers of the new race. 

More certain and more calculable are the psychological con¬ 
sequences of war. Once it was reasonable to assume with 
H. G. Wells—in his role as novelist, not as historian—that 
nations engaged in deadly war might stop in time to avert 
its worst calamities by the organization of a durable peace. 
After Versailles we ought to know that nations which engage 
in war are not capable of making that kind of rational re¬ 
construction. At best, the little craft of men’s reason is 
tossed about on stormy seas of passion and prejudice. In 
war it is almost wholly submerged. Lies are marshalled like 
men for the conduct of the war. The truth can only be 
told after it is too late. Fear and hate are organized in 
order to maintain the “morale” of soldiers and civilians. 
The best that can be hoped is a peace of exhaustion between 
evenly matched opponents. If either side is completely vic¬ 
torious nothing can be expected but a peace of vengeance. 
So much must be granted to the defenders of Woodrow Wilson 
at Versailles. Ray Stannard Baker and others argue that 
he did the best he could, given the state of public opinion 
at home and abroad. Whether or not they are entirely right, 
they are right to this extent: the atmosphere in which wars 
have been fought is never the atmosphere in which recon¬ 
struction can be begun. Those who believe that new war 
is inevitable are the supreme pessimists of our time. They 
believe in the suicide of civilization and if some of them 
believe that after new war, a reconstruction can take place, 
so glorious as to be worth the agony that has gone before, 
they are deceiving themselves and us with a mirage more 
dangerous than any which ever lured weary travellers over 
the desert. If civilization cannot end war, war will end 
civilization, and with it it may come close to ending the life 
of those nations or races which engage in it. 


6 


The Causes of War 

The first step in the abolition of war is an analysis of those 
causes from which wars spring. There is much confusion on 
this subject in popular thought. Wars, we are told, are in¬ 
evitable, given human nature. Wars spring from racial 
hatred, which apparently is an immutable characteristic of 
mankind. Particular wars, like the last, are popularly ex¬ 
plained in terms of the lunatic nation, or the devil-possessed 
nation, and the struggle is portrayed as that of light against 
darkness. Each state presents itself to its citizens and con¬ 
scripts soldiers in the role of Saint George against the dragon. 
When war is actually upon us some such idealization of it is 
necessary. Men fight better if they persuade themselves or 
are persuaded by others that they fight God’s battles for 
Him. Signor Nitti, ex-Premier of Italy, candidly admits 
the nature of war propaganda when he writes: 11 That state¬ 
ment [that Germany and her allies were solely responsible 
for the war which devastated Europe] which we all made 
during the war, was a weapon to be used at the time; now 
that the war is over, it cannot be looked on as a serious 
argument.”* 

In this time of comparative peace, it is well to examine 
the popular explanation of war which we are not permitted 
to challenge when the conflict is upon us. Pugnacity is a 
human instinct, and differences between men, even violent 
conflicts between them, are as old as humanity. War, how¬ 
ever, is not an informal and spontaneous conflict between 
individuals, but a highly organized conflict between groups. 
It had a beginning in the life of the race on this planet and 
it may have an end. The soldiers who fought the last war 
had no instinctive hatred of men whom they had never seen. 
The hatred had to be carefully worked up. Even in the 
front trenches there were times when measures had to be 
taken to prevent fraternization. Such wholesale destruction 
as war implies is not instinctive. Neither does it spring from 
racial hate. There are racial prejudices which are serious 
obstacles to a true internationalism, but they do not of them¬ 
selves explain the social phenomenon of war. Certainly they 
do not explain the last war when English, French, Africans, 
Russians, Japanese and Hindus fought against Germans, 
Magyars, Bulgarians and Turks. 

♦Nitti: “The Wreck of Europe,” (Bobbs Merrill Co.) p. 80. 

The same idea was expressed in other words by Admiral Sims in 
an interview in the New York Tribune, April 15, 1923. 

7 



The tap root of war is economic. The fact is generally 
admitted by economists and even by military writers. Rear 
Admiral A. P. Niblack, U. S. N., in a recent book entitled 
“Why Wars Come,” thus states bis thesis: “It is here main¬ 
tained that greed is the ultimate cause of nearly all wars 
through the selfish national policies pursued/’* More ac¬ 
curate than Admiral Niblack’s blunt assertion is Professor 
Seligman’s careful statement: “If I read history aright, 
the forces that are chiefly responsible for the conflicts of 
political groups are the economic conditions affecting the 
group growth.”** 

The Religion of the State 

To understand the force of economic conditions one must 
remember that they do not operate on a wise and calculating 
humanity but on men prone to fear, passion and pride. When 
these emotions are aroused men—especially crowds of men— 
may be left in mad disregard of any rational interest. 
Especially one must remember the peculiar loyalty the group 
demands of the individual. Cavour’s confession: “We should 
have been great rascals if we had done for ourselves what we 
have done for Italy,” is characteristic of the superiority of 
the group interest to the moral code. The group interest in 
our day finds extraordinary expression in the dogma of the 
god-state and the emotion of nationalism. 

The god-state of the modern world is an absolute deity de¬ 
manding unconditional obedience of its subjects and sanctify¬ 
ing all conduct which makes for its own power and pros¬ 
perity. Its chief concern at home and abroad is with the 
protection of property. Nationalism is in this day and gen¬ 
eration the most powerful social emotion. It requires for 
its full fervor rivals to surpass or enemies to fear and hate. 
Patriotism is essentially war-like, invoked a hundred times 
to rally the nation against other nations for every time that 
it is mentioned as a reason for improving the lot of the down¬ 
trodden within the national borders. The tragic paradox of 
the situation is that though the average man hates war it is 
only in a state of war that the delectable social emotions con¬ 
nected with nationalism come to their own. We have so far 
failed in our social organization that it is only in a state 
of war that every citizen is made to feel a direct interest 

•Niblack: “Why Wars Come," (The Stratford Co.) p. 6. 

••An Economic Interpretation of the War, by E. R. A. Seligman, 
in “Problems of Readjustment After the War.” (D. Appleton & Co., 
1915), page 43. 



in and responsibility for his idol, the national state. This 
religion of the state is deliberately taught. Our schools 
are temples of nationalism and history is devoted less to truth 
than to extolling the glories of one’s own particular state, and 
perpetuating hate of its rivals. Lessons learned from the 
success of war propaganda have accelerated the process by 
which the political state organizes the communicating of ideals, 
opinions and emotions to the one end of winning the blind 
allegiance of the masses to itself. 

One phase of this process is illustrated in naive fashion by 
a bill which has just passed the Senate of New York state by 
a big majority. (The same Senate had to its credit previously 
voted for the repeal of the Lusk Laws which are more oppres¬ 
sive measures designed to tie education to the chariot of the 
state.) The new bill seeks to exclude from primary and second¬ 
ary schools all histories which fail to teach—not the frankly 
unmoral dogma: “my country right or wrong”—but the more 
arrogantly self-righteous dogma: “my country is always right.” 
Here are some of the provisions enumerating the kind of book 
to be excluded: 

(i) which belittles or ridicules the accomplishments of 
American soldiers, sailors or marines in our wars against 
foreign nations, or which so stresses or lays such dis¬ 
proportionate emphasis upon any alleged phase of a 
military or naval combat or upon any circumstance 
alleged to have been connected therewith as to leave 
in the minds of youthful readers a contempt for the 
American soldiers, sailors or marines of that period 
or an unwarranted skepticism regarding their successes 
under arms, or 

(j) which impugns the motive or the motives that inspired 
the American soldiers, sailors or marines who fought 
in the wars waged by the United States in establish¬ 
ing, defending or preserving its rights as a free nation 
or the rights of its citizens. 

Citizens brought up in the daily ritual of flag worship and 
under the doctrine of the infallibility of the soldiers, sailors, 
and marines of their own country are fit material for war. 
They will be faithful to their cruel god, the state, even unto 
death. But that which turns this blind devotion into war is 
usually a conflict in economic interest between political groups 
as the history of the wars of humanity clearly shows. 

How Economic Conditions Produce War 

Wars probably first arose out of a compelling desire to 
insure a food supply for the growing population. That was 


9 


the cause of the great migrations of peoples from Asia into 
Europe. Under changing conditions political groups fought 
to increase the area of the supply of certain kinds of food or 
of raw materials. Later they fought for favorable markets. 
Says Professor Seligman: 

The great wars of the seventeenth and eighteenth centuries, 
fought in order to control the sea and to expand the colonial 
empire, all had in view the development of the nascent industry 
on capitalist lines. Protection of industry was the character¬ 
istic mark of nationalism during this period.* 

The success of Great Britain in these wars, the extent of 
her empire, and the fact that the industrial revolution took 
place first in England, changed the situation for her. She 
had won an industrial supremacy; obviously free trade and 
universal peace were the best means to perpetuate it. Men 
of the Manchester School were sincere in their internation¬ 
alism and love of peace and they were right in their inter¬ 
pretation of England’s immediate interest. A country with¬ 
out serious industrial rivals required neither protection of 
home markets nor extension of political control over other 
countries in order successfully to barter manufactured goods 
for food supplies and raw materials. From the end of the 
Napoleonic struggles down to the middle of the nineteenth 
century, and to a considerable extent thereafter, England’s 
economic interest made for peace. Yet even in that period— 
against the bitter protests of men like Cobden and Bright— 
England resorted to war in order to force the deadly opium 
trade on an unwilling China. If that particular act of infamy 
has not been paralleled by any nation, it still remains proof 
of the terrible lengths to which greed will drive the governing 
classes of a nation and the powerlessness of a comparatively 
uninformed public opinion to stay that greed. 

The nineteenth century furnished another more creditable 
illustration of the enlargement of markets in Asia, by a 
scarcely veiled threat of force. It was an American fleet 
which opened the ports of Japan to the trade of the world. 
If Perry’s visit was friendly, that was because the Japanese 
rulers were astute enough to read the signs of the times 
and open their doors to trade. Otherwise the demands 'of the 
traders might have led to war. 

Today the protective principle keeps commerce from being 
the bond of unity between nations that it was in the eyes 

•Seligman op. cit., p. 48. 

10 



of Cobden and Bright. Joseph Chamberlain, who fought the 
British free trade tradition declared: “the British Empire is 
. . . commerce,” and to protect that commerce he insisted 
on maintaining the supremacy of the British navy. Other 
statesmen of other countries have held similar notions.* 

The particular form of modern trade which tends directly 
to promote war is the trade in armaments by private interests. 
In time of peace armament makers know neither patriotism 
nor principle. They sell cheerfully to any customer however 
possible it is that the customer may become the enemy of 
their own country. But with supreme effrontery, these same 
armament makers ask the support of the diplomats of their 
own native country in the cold-blooded game they play for 
profit. Achille Loria, the Italian economist, thinks that 
armament makers were partly responsible for the Balkan 
War which was a prelude to the Great War. Governments 
directly have taken part in the sale of armaments. The 
United States has sold unwanted battleships to weaker 
powers. It now has a naval mission in Brazil. It is not 
clear why Brazil needs a larger navy or why it is the busi¬ 
ness of Americans to encourage such a navy. Already the 
presence of this American naval mission has called forth 
sharp expressions of resentment and suspicion in Argen¬ 
tina. But doubtless American steel makers would profit 
greatly if Brazil should go in for a big navy. 

Investors as War Makers 

Nevertheless, it is not traders even in armaments who are 
primarily responsible for modern wars. Investors are the 
modern war makers. Not commerce with “backward coun¬ 
tries^ but control of their raw materials is the chief prize for 
which stronger nations contend. 

The change came with the growth of surplus capital in 
England, and later in other industrial countries. There is 
in most nations a comparative saturation point at which new 
capital is invested at home with small profit. Under these 
circumstances, possessors of surplus capital wrung out of the 
exploitation of the working class, seek for higher rates of 
interest which can be found by investments in foreign con¬ 
cessions or in loans to weak and corrupt rulers. It is this 
export of capital rather than of goods in which the new 
imperialism originated and out of which the last war was 

♦Sidney and Beatrice Webb: “The Decay of Capitalist Civilization." 
Pages 196, 197, (Harcourt, Brace & Company.) 


11 



born. The new imperialism had its birth in 1850, when Lord 
Palmerston established the precedent of enforcing the claims 
of British citizens in foreign countries by the power of the 
British navy. This bad doctrine began with a bad claim. A 
certain Don Pacifico, a Portuguese Jew of British citizen¬ 
ship, living in Greece, had a claim against the Greek govern¬ 
ment which he refused to submit to the Greek courts. He 
appealed instead to Great Britain. Palmerston collected the 
claim for him. Other industrial nations have since that time 
followed the same precedent. 

It was in the capacity of debt collector that Britain con¬ 
quered Egypt.* It is British investments more than romance 
or sentiment which make India “the brightest jewel in the 
imperial crown.” India was originally acquired at the dic¬ 
tate and under the method of an older form of imperialism. 
Her conquerors were not investors but traders, adventurers 
and magnificent looters. But the possession of India is 
profitable to England today not only because it furnishes a 
market for cotton goods—a market originally created by the 
deliberate ruin of Indian domestic manufacturers—but also 
because of the annual stream of tribute which impoverished 
India pays out of its economic life blood in salaries and pen¬ 
sions to British officials and dividends to British investors.** 

France came into competition with England for this new 
empire of capital in the latter part of the nineteenth century 
and English and French rivalries in Africa nearly led to war. 
Germany took up such rivalry in earnest only with the be¬ 
ginning of the twentieth century. The pressure of her in¬ 
creasing population as well as the ambition of her capitalists 
drove her forward. She found her way barred in many direc¬ 
tions by the older imperial powers. She came into conflict 
with Britain over the Bagdad railroad and more acute con¬ 
flict with France over Morocco.! 

In the effort to strengthen the bargaining power of German 
capitalists and to give them better cards to play against their 
British rivals, it became advantageous for Germany to create 
a large navy and seek coaling stations throughout the world. 
This attempt, to quote Professor Seligman, “necessarily con¬ 
stituted a challenge to England’s virtual monopoly of sea 

*H. G. Brailsford: “War of Steel and Gold,” (G. Bell & Sons), 
p. 95ff. 

•♦Lajpat Rai: “England’s Debt to India,” (B. W. Huebsch). 

tSee E. D. Morel: “The Truth About the War” and “Ten Years of 
Secret Diplomacy,” (National Labour Press.) 

12 



power and engendered in both countries the state of mind 
which . .. finally resulted in .. . conflict.”* 

There were other factors which made for war beside those 
just indicated. France feared the pressure of Germany and 
sought revenge for the wrongs inflicted upon her in 1870-71. 
Germany feared the enormous mass of Czarist Russia. 
Austria and Germany could not with equanimity see Rus¬ 
sian influence dominant in the Balkans. But behind these 
fears were active economic rivalries and interests. Russia 
sought power in the Balkan countries because they were on 
the road to Constantinople and from the days of Peter the 
Great the Russian rulers had understood the value of this 
outlet on the open sea. One thing that inclined England to 
the Entente as against the Triple Alliance was fear of 
German industrial, if not political, hegemony on the Continent 
and German rivalry for investment markets especially in the 
Near East. The situation was understood by careful students 
in the belligerent as well as in the neutral countries even 
during the Great War. The London Economist declared on 
November 20, 1915, that the desire to find a lucrative employ¬ 
ment for capital in new countries was the real underlying 
cause of the horrible conflagration.** 

The Great War 

This economic explanation of the cause of war is vastly 
more important than the question of the immediate guilt of 
those who started it. Even if German arrogance or German 
nervousness made Germany pull the first gun in the monstrous 
poker game which the European powers, all armed to the 
teeth, played for the profits of world exploitation, it would 
still be true that Germany was not solely responsible for the 
game which ended in war. As a matter of fact, thanks to 
the publication of secret documents in Berlin, Moscow and 
Vienna, we know that Austria’s and Germany’s guilt for 
precipitating the war was not as exclusive as it once seemed. 
In pre-war diplomacy, Poincare and his French associates; 
and the Russians Sazanov, Izvolsky, and Sukhomlenov, 
played almost as sinister a role as Count Berchtold of Austria 
and the German Kaiser or any of his advisers. We know 
now that long before Belgium was invaded, Britain was com¬ 
mitted by Sir Edward Grey to the side of the Entente. The 

•Seligman; op. cit. p. 58. 

••Quoted by Achille Loria: Lessons of the Great War, a supple¬ 
ment to his work, “Economic Causes of War,” and in the English 
version included as part of that book. (Chas. H. Kerr Co.) p. 168. 

13 



British government could not say plainly to Germany, “If 
you invade Belgium we will fight you,” because the British 
government was morally committed to fight on France’s side 
in any event. In the decade preceding the war, the Entente 
powers had spent far more in military preparation than their 
rivals. 

As the war proceeded the Allies by their secret treaties made 
it plain that their ambitions were as imperialistic as the am¬ 
bitions of the Central Powers. The notion of one guilty nation 
which forms the moral basis of the Treaty of Versailles is false. 
No nation deliberately willed the holocaust of 1914-1918. 
Lloyd George told the truth when he admitted that the war 
was something into which the rulers “glided, or rather staggered 
and stumbled.”* But they stumbled into war because they 
had first rushed in support of their own investors into armed 
and unscrupulous rivalry for world power and profit. 

If nations did not deliberately will war still less did the 
capitalists out of whose rivalries the war sprung. Capitalism, 
as the Webbs have pointed out 

is impotent in the face of the national passions, the inter¬ 
national jealousies and terrors, the romantic pugnacities roused 
by its attempts to use national armaments as a trade police. 

It cannot even pursue these attempts with pacific integrity: 
the establishment of an effective police in its completeness 
means nothing short of conquest and annexation; and these 
mean war, which, though colossally profitable to certain trades 
for the moment, involves an appalling destruction of capital 
and thrusts a ramrod into the financial machinery on which 
the whole business of foreign trade, and consequently of much 
domestic trade, depends. ... In short, in diplomacy and 
war, the profiteer hegemony is omnipotent for evil and impotent 
for good. It can bind; but the sword has to loose.** 

After the war was over, no less an authority than Presi¬ 
dent Wilson admitted the theory which is here set forth. In 
his speech at St. Louis, September 5,1919, he declared: “Why, 
my fellow-citizens, is there any man here, or any woman— 
let me say, is there any child here—who does not know that 


*It is not the purpose of this pamphlet to go into the question of 
the origin of the war. An increasing mass of material on the subject 
is available in the principal languages of the wmrld. This material 
has been admirably reviewed by Lewis S. Gannett in The Nation in 
two articles, “They All Lied,” Nation October 11, 1922, and “How the 
Russians Lied, in the Nation December 20, 1922. Professor Charles 
A i ?« ea I d t re ^ the Jitter dispassionately in the first three chapters 
of his book. Cross Currents in Europe Today.” Signor Nitti has in¬ 
teresting re flec tions on the origin of the war scattered through his 
book, “The Wreck of Europe.” 

and Beatrice Webb: “The Decay of Capitalist Civiliza¬ 
tion, pages 204, 205, (Harcourt, Brace & Company.) 


14 



the seed of war in the modern world is industrial and com¬ 
mercial rivalry? . . . This war, in its inception, was a 

commercial and industrial war. It was not a political war.” 

America Enters the Great Game 

Up to the outbreak of the Great War, the United States 
had found little occasion to enter into this rivalry of in¬ 
vestors. The development of its own great continental terri¬ 
tory profitably employed the surplus capital its citizens 
amassed and much that they borrowed from abroad. From 
the ethical standpoint, America has always been imperialistic. 
It took land without scruple from the American Indian and 
wrested it at will from Mexico. It developed Negro slavery 
to a degree unknown to any modern nation and maintained 
it to a later date. Under cover of the Monroe Doctrine it 
has asserted an increasing dominance over the destiny of the 
weaker nations of the Western Hemisphere. It acquired 
Hawaii after the approved manner of Anglo-Saxon imperi¬ 
alism. But this sort of imperialism did not bring us into 
sharp conflict with the European powers. Even the Spanish 
War scarcely drew us into the circle of imperialistic poker 
players. Self interest led us to support the “open door” 
policy in China and we added a little wise benevolence in our 
use of part of the Boxer indemnity for the education of 
Chinese youth.* 

The Great War changed the situation. In the short space 
of three years the United States from a debtor nation became 
the chief source of credit. We did an immense business in 
war supplies. But with only one group of belligerents. At 
first our government protested vigorously because the British 
navy shut us oflf from trade with the Central Powers, contrary 
to the principle of freedom of the seas for which the United 
States had historically stood. But the Allied trade absorbed 
American goods so completely and loans to the Allies gave 
American bankers so heavy a stake in Allied success that our 
protest became less and less urgent. Finally, when our trade 
was menaced by German submarines and the success of our 
debtors was imperilled, we entered the war. 

Our intervention brought about victory without peace, 
where a wiser and stronger policy of neutrality might have 
brought peace without victory. If Wall Street could have 
foreseen the world of 1923, it and with it a lot of plain 

♦On this paragraph, see Scott Nearing: “The American Empire.” 

15 



Americans might have been less keen for war than in the 
winter and spring of 1917. But then things were different. 
John Kenneth Turner quotes the New York Sun’s financial 
column, April 9, 1917: “Sentiment among bankers is 
patriotic and it is bullish ... To many persons, long 
on stocks, war apparently merely spells another long period 
of abnormal profits for our corporations . . . The big 

men hold stocks .”* Mr. Turner continues the story: 

After the profits of expectation, followed the profits of 
realization. Allied credit was not only insured j it was guar¬ 
anteed. Allied trade, which, in the words of a financial cir¬ 
cular, had come to be looked upon as a ‘ * pinchbeck ’ ’ again 
became “the genuine article .’’ The boom was prolonged. It 
became possible to advance wholesale prices in April on an 
average of two per cent over March, making the total since the 
beginning of the European war 57 per cent. This was only 
a beginning. By the middle of May, The Times was able to 
say: “Business is still feeling the momentum imparted by 
the vast buying demand opened up when the United States de¬ 
clared war.” This momentum rose, instead of falling—rose 
steadily for eighteen months, until the German collapse.** 

The suggestion that economic reasons were decisive in 
bringing America into the struggle may seem like an insult 
to the very real devotion of those who fought to protect small 
nations, end war, and make the world safe for democracy. 
These ideals were loudly expressed and genuinely felt in 
America. But it is a matter of record that they did not bring 
the United States into the war nor were they operative in 
the making of the peace. The United States did not declare 
war after the invasion of Belgium, the sinking of the Lusi¬ 
tania, or the ravaging of Armenia. On the contrary, its 
citizens voted for the man who had kept us out of war as 
late as November, 1916. There was no fear of German in¬ 
vasion of our shores. What happened at the Dardanelles 
had shown the impossibility of naval invasion of a distant and 
moderately well fortified country. The thing that did most to 
change America’s attitude between November, 1916, and 
April, 1917, was the increased menace to our trade and our 
investments, due primarily to the German effort to match the 
British blockade by unrestricted submarine warfare. This 
economic motive did not for the most part act directly. It 
played upon and hid itself in a tangle of national pride, in- 


p *279 hn Kenneth Turner: “Shall It Be Again?” (B. W. Huebsch.) 
’ **Ibid., p. 280. 


16 



dignation, undefined fear for the future, and sympathy for the 
Allies, partly spontaneous, partly born of elaborate propaganda. 

Germany certainly gave cause for moral condemnation. 
Without that cause it would have been harder to get the 
country into the war. But if conditions had been reversed 
and America’s trade had been with the Central Powers rather 
than with the Allies, it is questionable whether the moral 
condemnation of Germany would have been so keen and the 
acceptance of Allied imperialism so uncritical. Such are the 
crimes of states that when economic conditions put them in 
opposition it is always possible for each state to dig out of 
the other’s history or to find in its present conduct extremely 
reprehensible acts. Imagine, for instance, if ever there 
should be a war between the United States and Japan, how 
Japanese orators would denounce our lynchings and burnings 
at the stake! With what eloquence they would proclaim a 
Holy Crusade to make America safe for the black man! But 
that is not why there would be war between Japan and 
America. We shall never understand or guard against the 
part that profit plays in bringing about war until we recog¬ 
nize that it seldom or never appears naked and unadorned 
even to those most animated by it but robed by the strange 
psychology of mankind in the garb of an angel of light. The 
most sordid adventures in imperialism are always justified as 
a service to God and a part of the burden He has put on 
the white man’s back. 

The Settlement—and After 

The same principle of competitive nationalism and economic 
self interest which led to the war, determined the nature of 
a settlement which has proved no settlement. That is far 
from saying that the reorganization of Europe was deter¬ 
mined by keen economic understanding even of a selfish sort. 
Economic interest was seen by all nations through the mist 
of passion, hate and fear. Not self-interest as it was under¬ 
stood by a few economic experts and international bankers, 
but the popular notion that the way to prosper was to destroy 
one’s rival, imposed a peace upon Europe which was scarcely 
less disastrous than war. 

Of the developments of the years since the peace, whether 
for good or evil, there is not space to speak in detail. Certain 
generalizations may be suggestive: 

1. Capitalism is still dominant. The revolutionary tides 
have ebbed. Though the labor movement and the socialist 


17 


parties are stronger in many ways than before the war,* they 
proved themselves unready and unable to take over the re¬ 
organization of a broken world. The passions of nationalism 
were still too strong among the workers. Labor lacked ad¬ 
ministrative and technical skill in its own ranks and confi¬ 
dence in its own power. It was divided by schisms. In 
Russia, the least industrial of nations, a proletarian govern¬ 
ment firmly established itself, but economically it has had to 
recede from communism toward state capitalism. 

Yet capitalism, especially of the individualistic sort, has 
already passed the zenith of its power. No less a conserva- 
tive than Lord Milner, of England, has written articles in 
criticism of modern industry which repeat “in all essentials 
the indictment 1 ’ of the Webbs or R. H. Tawney.** The re¬ 
ligion of capitalism was the gospel of saving. Let the thrifty 
man deny himself present pleasures, invest his savings, and 
he or his children will reap a rich reward. This gospel has 
been sadly discredited in those countries which during the 
war and the years since the war have expropriated as ruth¬ 
lessly as any Bolsheviks, the savings of the middle class by 
the inflation of currency. The very foundation of a healthy 
capitalist psychology is destroyed whenever what you spend 
you have and what you save you lose. Despite the achieve¬ 
ments of Stinnes and other super-capitalists and the gradual 
return of many European nations to work, there is still a 
danger lest the decay of capitalism lead Europe to chaos before 
the constructive forces are strong enough to build. 

2. Capitalism is closely allied with the state. During 
the war it was necessary to nationalize industries (or put 
them under national control) to an unprecedented degree. 
After the war the various states gave back a large measure 
ot power over industry to private owners, but they still kept 
a benevolent interest in the prosperity of those industries. 
Ihe relation between the German industrialists and the Ger¬ 
man government is notoriously close. England, the classic 
country of free trade, has passed a preferential tariff law and 
by law and through diplomacy has vigorously cooperated with 
merchants and investors in building up export trade and in 




18 



acquiring concessions, notably for the development of oil. 
The United States has followed suit. Says Professor Beard: 

Our huge industrial and banking corporations are driving 
hard in every market. Our government modifies its anti-trust 
laws to give them free sway in other lands. Our government 
builds an immense merchant marine at the expense of the tax 
payers, turns it over to private operating companies, and now 
proposes endless millions in the way of subsidies. Our govern¬ 
ment, finding our Eastern trade menaced, calls a world confer¬ 
ence and by brilliant negotiation forces England and Japan 
apart and compels the reaffirmation of the open door for China 
—which means in essence, better opportunities for American 
trade in China. Our government, with its navy and marines, 
helps our investment bankers collect their debts in the Carib¬ 
bean. Our government gives diplomatic support to financial 
and commercial enterprises everywhere on the face of the earth. 
Foreign affairs relate principally to investments, trade, iron, 
coal, oil, copper, and rubber, and other raw materials.* 

At present this alliance between nations and big business 
is intensely capitalistic. The profit and wage system and the 
rights of absentee owners are still axiomatic in our economic 
practice. But industry might be socialized along national 
lines and still the danger of competition between nations 
would remain. Such a process would substantially reduce the 
number of profit hunters and diminish the surplus capital in 
their hands. The workers would be less acquisitive and 
probably more sympathetic with their comrades in other lands 
than the lords of capital. Socialized industry would be less 
dependent on foreign markets and the workers could afford 
better than profit seekers to use any surplus for the develop¬ 
ment of their own country. 

On the other hand, if the process of nationalization were 
so carried on as to bind the loyalty of the workers more closely 
to the nation an exclusive patriotism might be increased. For 
many months after the Armistice the British government 
controlled the export of coal. Coal production in Europe 
was at a low ebb. British coal was sold in Europe for the 
maximum price with no regard for the desperate poverty of 
the people. The profits from this foreign sale enabled the 
government to keep the domestic price down and wages up. 
When German reparation coal began to pour into France and 
Belgium, the British export market broke, the government 
abandoned its control, private owners sought to reduce wages 
and the disastrous coal strike began. There was no coal strike 
and little agitation among owners, workers, or consumers in 

•Cross Currents in Europe Today, (Marshall Jones.) Page 133. 

19 



England in behalf of fellow workers and fellow consumers 
in Europe so long as the market was good. This is not said in 
special criticism of British miners. They acted as other 
bodies of men would probably have acted in similar circum¬ 
stances. If they themselves had controlled the industry, they 
might have acted more generously, but they probably would 
still have thought in terms of national advantage. Socializa¬ 
tion of industry which is purely national in outlook; demo¬ 
cratic control which is not inspired by conscious internation¬ 
alism, will not assure world peace. 

The Great Rivals 

In the welter of competing nations, four imperial systems 
stand out as dominant—British, French, Japanese and Amer¬ 
ican. Italy lacks nothing of desire, but much of economic 
power—coal, iron and food supplies—to compete on equal 
terms with the big four. Fortunately, responsibility has some¬ 
what sobered Mussolini’s extreme chauvinism and has driven 
him in the direction of the wise foreign policy of Signor Nitti 
whom he so greatly detests. 

Germany is not in the reckoning as one of the great em¬ 
pires, but the organizing skill of her people, their industry, 
scientific capacity and numbers make it certain that sooner 
or later their country must again be reckoned with in world 
rivalry. Whatever may be said of the success or failure of 
the Russian economic experiment, politically the Soviet gov¬ 
ernment has worked miracles. When one remembers the 
chaotic condition of the Russia of 1917-18, the magnitude of 
the achievement becomes apparent. Russia already is a force 
to be reckoned with in world politics, and that not alone be¬ 
cause of the appeal its communist government makes to 
workers in other lands, but because Russia as a nation has 
become strong, aggressive and powerful. The degree of Rus¬ 
sian national influence in the future, however, will be some¬ 
what conditioned by the skill of Russian rulers in obtaining 
the foreign capital they desire for the development of Russia 
without putting Russia itself in pawn to the capitalists who 
lend the money. It is easier to work out on paper formulas 
for protection against that danger than to realize them in 
practice. It will be easier to talk internationalism than to 
practice it in a strongly developed centralized state. 

Not only must the dominant powers sooner or later reckon 
with Germany and Russia but they must reconcile their own 
differences if they would maintain the world’s peace. This 


20 


they have notoriously failed to do. France wants an economic 
and military hegemony of Europe which Britain historically 
has always denied to every power. What England did not 
yield to the Spain of Philip II, the France of Louis XIV or 
Napoleon, the Germany of Kaiser Wilhelm II, she will not 
willingly or permanently yield to the France of the National 
bloc and President Poincare. British and French interests 
have clashed in the Near East. They may clash elsewhere. 
It is hard to see how the Entente can survive unless France 
and Britain should be menaced by a fresh tide of social revo¬ 
lution or by some nationalistic agreement between Russia, 
Germany and possibly Turkey. 

Japanese imperialism has as its ambition assertion of a 
Japanese Monroe Doctrine in Asia. China and Siberia are 
the victims of Japanese economic expansion. All powers in¬ 
terested in the open door of China—that is a door open for 
investment even more than trade—regard the Japanese pro¬ 
gram with suspicion and dislike. The most desirable result 
of the Washington Conference on the Limitation of Arma¬ 
ments was to improve relations between America and Japan, 
but the conflicts in interest between the two Pacific powers 
were temporarily adjusted, not settled. The underlying 
causes of them remained. We Americans who see very clearly 
the sins of others are aware of the wrong that Japan has done 
to Korea and to China and to Siberia. We are suspicious 
even of the moderation of the present Japanese government. 
What we fail to understand is that in a world war nations 
struggle for the command of raw materials. Japanese im¬ 
perialism is peculiarly defensible not in terms of ethics but of 
real politik. Japan, unlike England, has no supply of coal 
and iron at home and no colonies to make up the lack. Her 
sons and daughters are numerous and energetic. Many of the 
most desirable regions of the world are closed to them. Her 
life depends upon her becoming an industrial nation and that, 
in turn, depends upon access to raw materials. Since she 
has not these raw materials in her own boundaries, and since 
she cannot trust to the ordinary processes of trade to procure 
her a steady supply from the territories of her competitors, 
she feels obliged to do what she can to stake out spheres of 
influence in Siberia, Manchuria and other parts of China. 

America’s Role 

In all this competition for profit and for power, America 
is intensely interested. The United States renounced any 


21 


claim to indemnity after the Great War, but its former allies 
were in its debt for more than ten billion dollars. The econ¬ 
omist may argue that it would be better business for America 
to forgive or reduce this debt. So far this argument has 
made little impression on popular psychology. At present 
the United States wants to collect this debt at the very time 
that it desires to build up a market for its surplus food sup¬ 
plies and manufactured articles in Europe and to exclude 
by a high tariff European goods from its domestic markets. 
The economist who can show how all three of these economic 
ambitions can be attained at once, having solved the insoluble, 
ought to be fully prepared to “unscrew the inscrutable .*’ 
Meanwhile, so long as Europe owes these billions to the United 
States, it is idle to think that our country can return to its 
old isolation and indifference to European problems. 

Not only are we bound to Europe by public debts, but by 
the private investments of American citizens in European 
bonds. Following the suggestion of Professor Beard, we turn 
to the financial columns of the New York Times. On Febru¬ 
ary 21, 1923 (the date is chosen at random) foreign bonds 
were listed under the following heads: 

Japanese Government 
Jurgens, (Antwerp) 

Kingdom of Belgium 
Kingdom of Denmark 
Kingdom of Italy 
Kingdom of Netherlands 
Kingdom of Norway 
Kingdom of the Serbs 
Kingdom of Sweden 
Paris-Lyons Railroad 
Republic of Bolivia 
Republic of Chile 
Republic of Colombia 
Republic of Cuba 
Republic of Haiti 
Republic of Uruguay 
State of Queensland 
State of Rio Grande do Sul 
State of San Paulo 
Swiss Confederation 
United Kingdom of Great 
Franco-American Industrial Britain and Ireland 
Development United States of Brazil 

French Government United States of Mexico 

Holland-American 


Argentina. 

Chinese Railway 
City of Berne 
City of Bordeaux 
City of Christiania 
City of Copenhagen 
City of Greater Prague 
City of Lyons 
City of Marseilles 
City of Montevideo 
City of Rio de Janeiro 
City of San Paulo 
City of Soissons 
City of Tokio 
City of Zurich 
Czechoslovak Republic 
Danish Municipalities 
Department of the Seine 
Dominican Republic 
Dominion of Canada 
Dutch East Indies 


22 


After reciting a similar list, Professor Beard comments: 

In accordance with a custom, consecrated by time, the bond¬ 
holders, whenever a disturbance is threatened or a default is 
at hand, look eagerly to the government at Washington to 
support their interests diplomatically if not more vigorously. 
The genial American public, that takes up millions of oil stocks 
every year, seizes eagerly at the opportunity to get seven and 
eight per cent on the bonds of foreign countries and so every 
new loan is received with enthusiasm. Let this process go on 
for fifty years, and the people of the United States will have 
reconditioned Europe and Asia, and at the same time created 
an interest obligation that will either flood our markets with 
European goods by way of repayment, or raise the dollar to 
a ruinous height in the exchanges of the world. They will 
also have incurred a gigantic financial risk which a new war 
or a social revolution in Europe would transform into wide¬ 
spread ruin with its corresponding effects on our political 
issues. In short, the United States, through the investment 
of capital, has become a silent partner in the fate of every 
established order in the world. Unless we are to assume on the 
basis of the experience of the past three hundred years that 
there will be no more World Wars or social cataclysms, it is 
safe to conjecture that days of greater trouble are ahead, 
whether we enter the League of Nations or stay out of it. 
Once a great European war merely deranged our foreign trade; 
in the future it will disturb every investor in every village 
Main Street.* 

The United States and Latin America 

There is one aspect of American economic penetration which 
is especially noteworthy. It is partially indicated by the 
number of Latin American bonds listed on Wall Street. 
During 1922 at least a quarter of a billion dollars were in¬ 
vested in the countries to the south of us. To appreciate 
what this means one must remember that unlike some of the 
European countries our Latin American debtors are not by 
comparison numerically strong or very powerful and they 
have great riches to exploit. Already the marines have fol¬ 
lowed the investors into many of the Caribbean countries. 
Cuba is nominally independent, but Cuba is not independent 
of American bankers and investors, as General Crowder has 
forcibly brought home in his dealings with the Cuban govern¬ 
ment. Porto Rico and the Virgin Islands are American prop¬ 
erty. Santo Domingo is emerging from a wholly illegal 

♦Beard, op. cit. p. 245. The Chester grant—announced after this 
pamphlet was written—emphasizes Prof. Beard’s warning. To Amer¬ 
ican investors it may look like a road to fabulous power and profit; 
to the American people—if their government backs Chester in con¬ 
ventional fashion—it more likely will prove a road to diplomatic 
strife and even war. 


23 



government under an American Rear Admiral into the status 
of an American protectorate which must legalize loans con¬ 
tracted for by the illegal occupation! Haiti has a puppet 
government controlled by American marines.* Under Presi¬ 
dent Wilson’s administration, her territory was occupied in 
force, a new and unwanted constitution was thrust upon her, 
her land laws were changed to permit foreign ownership, for 
months a corvee system was maintained which meant practical 
slave labor and rebellion against this and other high 
handed acts of American occupation was put down with 
brutality. Still further to settle American control on the 
black republic, there has recently been forced on the puppet 
government an unwanted loan of sixteen million dollars. This 
loan is to run thirty years and it is provided that during the 
entire life of the loan American suzerainty over the country 
shall continue. The chief beneficiary of this imperialism has 
been the National City Bank which subscribed the loan. It 
is now trying to unload it on the public. 

Nicaragua is a fief of Brown Brothers and J. & W. Selig- 
man. They control the government’s railroads, its customs 
and its finances. Guatemala is a special preserve of Blair 
& Company. Our obliging State Department has marines on 
call to protect “law and order”—that is investments—in both 
republics. Their governments are American vassals. Costa 
Rica is a banana-growing plantation for the United Fruit 
Company which owns the railroads and the Atlantic ports. 
In justice to the United Fruit Company it ought to be said 
that it does not interfere with politics nor call upon the 
marines to defend its interests. The Republic of Panama, 
as everybody knows, was created by the Roosevelt Administra¬ 
tion in order to gain the Panama Canal. 

Farther south, Peru has been negotiating with the Guar¬ 
antee Trust Company for a loan. Unlike some of the Central 
American republics, it has made no treaty providing for an 
American collector of customs, but under pressure of the 
bankers, it consented to the appointment of an American super¬ 
visor, W. W. Cumberland, formerly of our State Department. 
Peru is in the midst of an oil boom. The Standard Oil Com¬ 
pany has over ninety per cent of the concessions. What that 
means m terms of real control, Americans who have experienced 


Society, *2*0 Vesey C Street, 


24 



the power of the Company need not be told. Bolivia borrowed 
money from the Equitable Trust and placed most of her 
revenues in pawn to guarantee the interest. Bolivia has ex¬ 
ceedingly valuable tin mines as well as oil as prizes for con¬ 
cession hunters. The boom in oil in Peru and Bolivia is, of 
course, only part of the general hunt for oil over all of the 
world in which the United States and Great Britain are the 
principal rivals. Democratic and Republican Secretaries of 
State have backed our oil investors in Mesopotamia and 
Mexico with equal fervor. Details of Anglo-American rivalry 
are shrouded in some obscurity like the details of our financial 
relations and political intrigues with Latin American coun¬ 
tries generally. We know, however, that it was in order to 
obtain advantage over British concession seekers that the 
United States Senate finally consented to pay twenty-five 
million dollars to Colombia as compensation for the loss of 
Panama. 

It is sometimes alleged that this American imperialism is 
of great benefit to the natives of backward countries. Of 
this there is no proof. What American cooperation did for 
the Philippines it has not done for Haiti, Santo Domingo, 
Nicaragua or Guatemala. The general influence of our gov¬ 
ernment has been to check the growth of a spirit of unity 
which would unite the little Central American countries into 
a nation too powerful to be controlled with a few regiments 
of marines. Mr. Hughes, to be sure, has just held a Central 
American Conference which has produced a number of treaties. 

They include conventions to establish free-trade between 
four of the republics (Costa Rica holds aloof from this), to 
limit the total military forces of the five republics to 16,400 
men, to provide for non-recognition of revolutionary govern¬ 
ments resulting from coups d’etats (this seems to perpetuate 
our puppet Government in Nicaragua and the reactionary 
Orellana Government in Guatemala), to reform electoral pro¬ 
cedure, and to establish a new court of justice.* 

As the Nation points out, this is a small compensation for 
the injury America has done to Central American unity. 
There were difficulties enough in the way of this unity to have 
made its attainment somewhat doubtful whatever the United 
States did, but there is no doubt that American influence has 
been against it. 

The Central American Federation formed two years ago 
was broken up a year ago because of the action, or inaction, 


*The Nation , February 21, 1923. 

25 



of the United States in Guatemala. The Central American 
Court of Justice formed in 1907 under the joint aegis of 
Mexico and the United States lapsed because the United 
States, under Mr. Bryan’s guidance, encouraged Nicaragua to 
refuse to recognize the court’s decision that the Bryan- 
Chamorro treaty between the United States and Nicaragua 
violated the rights of Costa Rica and of Salvador.* 

Our relations with Mexico are a little less discreditable than 
our relations with Haiti, chiefly because Mexico is a more 
powerful country and American public opinion which does 
not mind imperialism when it provides “education” for the 
marines (see any recruiting poster) is much more reluctant 
when it comes to sending an army into Mexico. Even so, we 
have within recent years twice invaded Mexico and threatened 
invasion many times more. The revolution against Diaz was 
not only a revolution against Mexican grandees and favorites 
of the president, but against foreign concession holders. That 
revolt, like most popular revolts, has been stained by folly, in¬ 
efficiency and bloodshed, much of which might have been 
avoided if those who struggled however blindly for liberty did 
not always have to struggle against the power of American 
corporations in Mexico. Today, the Obregon government is 
not recognized** by America simply because Secretary Hughes, 
in his role of high priest of the god property, has not won 
fiom it quite the confession of faith in the sanctity of in¬ 
vestments which he seeks, f 

Here are all the passions and interests out of which war 
springs. No Monroe Doctrine will forever hold in eheck the 
rivalry of European powers and possibly Japan for the 
enormous wealth of Latin America which the United States is 
so aggressively exploiting. No Pan-American sentimentalities 


'The Nation, February 21, 1923. 

for . recognition have since been begun We hoDe 
M +P?L£iV°JL pay to ,° bi S a P rice for this boon. S ° Pe 

TPresident Obregon s grasp of the world wide imDortanee nf 
£ Is ? wn internationalism of spirit are^shown 
quote £ ’ tatement by him in the NeW York World > April 9, 1923? ft We 

"We have never coveted Mexican isolation from the re«st nf 
il!led W p r e 1 o d ple We W ‘ Sh t0 live in oonsort LTci?- 

toffiffi.'SSSS: slnce°the S 

Mexico* ha* e H&J&FS'StX AT 

per, as already demonstrated, with our own resources S 


26 



will forever check the wrath of our Southern neighbors against 
ruthless exploitation by men of alien race. 

Two Uses of the Export of Capital 

In this brief review of financial imperialism it is important 
to note the uses for the export of capital. First, there is 
export of capital for investment purposes in loans to back¬ 
ward countries. Second, there is export of capital to acquire 
and develop concessions for the working of natural resources. 
The first is illustrated by such loans as British investors made 
to Egypt, the French to the Sultan of Morocco and the Czar 
of Russia, and the Americans to Nicaragua. In so far as this 
form of export of capital endangers peace, the menace might 
theoretically be removed by one of two courses. Either the 
richer nations could forbid the export of investment capital, 
or more simply, they could refuse to make their armies and 
navies debt collecting agencies. Bankers would lend, if they 
lent at all, at their own risk. It is conceivable that the 
farmers and workers who have no interest in sending their 
sons to collect other people’s debts in foreign lands might be 
persuaded to adopt some such plan.* 

But the export of capital for the development of supplies 
of raw materials is another matter. No industrial nation, 
not even the United States, is sufficient to itself. Secretary 
Hoover has recently told Congress that against the monopo¬ 
listic control of raw rubber by British corporations “we must 
prepare for some sort of national defense.” This defense 
begins with an appropriation of $500,000 with which the De¬ 
partments of Commerce and Agriculture may investigate 
the practicability of interesting American capital in rubber 
growing in American possessions. Secretary Hoover com¬ 
plains also of foreign monopolistic control—or a tendency toward 
it—of nitrates, sisal, cocoanut oil and cocoa. 

Already the domestic supply of petroleum in the United 
States is nearing exhaustion. Says William Hard: 

In the year 1919 our imports of crude oil into the United 
States were 14 per cent of the volume of our domestic pro¬ 
duction of it. In the year 1920 they were 24 per cent of our 
domestic production. In the year 1921 they were 27 per cent. 
Washington needs no oil lobby to tell it that if we are going 
to joy-ride and truck-ride and plow with oil, we shall have 
to look overseas for the means with which to do it.** 

*A variant of this form of investment is a loan not by the bankers 
but the government of a stronger nation to a weaker. This, as in 
the case of the French loan to Poland, is a device to make the bor¬ 
rowing nation the ally, almost the fief, of its 1 great creditor. 

**The Nation, February 14, 1923. 

27 



Secretary Fall’s action in refusing to permit the lease of 
certain oil lands by the Roxana Company on the ground that 
it was controlled by the Royal Dutch Shell interests has called 
attention to the oil war now on. This action, be it observed, 
is directed primarily to the protection of American investors 
rather than consumers. Secretary Fall did not argue that 
American companies should not export oil lest it decrease our 
available supply. He merely insisted that we ought not to 
give a lease to a corporation controlled by citizens of countries 
which discriminate against American oil investors, no matter 
where that company sells its oil. The whole controversy is an 
illustration of the way in which the state functions in the 
interest of investors rather than consumers. 

Nevertheless, the oil war is at bottom of concern to the 
public. Even the most exploited worker of the United States 
or any industrial nation cannot look forward with equanimity 
to a situation in which the natural resources on which his own 
livelihood depends may be monopolized by an unfriendly 
power. So long as each of the industrial nations is in com¬ 
petition with its rivals, each nation will be compelled to do 
its utmost to obtain the means of protection against starva¬ 
tion of its people or its industries. However horrible war 
may be to a virile nation, starvation will appear a worse evil. 
Some nations, like the United States, do not now and will 
not in the near future face so terrible a choice. But countries 
like England, Japan and Germany contain a population which 
cannot possibly be fed without import of food. They are 
supported by industries which cannot be maintained without 
import of raw materials. Hence they cannot rest in their 
quest for power. 

Economic Interdependence—Political Rivalry 

In this machine age, we are economically interdependent. 
New York and London and Paris depend for their glory on 
the labor of men of all races in all countries. The New York 
Telephone Company, perhaps unconsciously, preached a ser¬ 
mon on this text by an exhibit in the show window of one of 
its commercial offices. In the window was a huge map of the 
world. In front of the map on a table was a telephone. Back 
from the telephone to various points on the map ran black 
streamers. These streamers illustrated not the possibility of 
speaking to those points on the earth’s surface, but the fact 
that the New York Telephone Company was dependent for 
supplies on materials drawn from the whole world. 

28 


This intricate and economic network necessary for our life 
and well-being is co-extensive with the world and yet men 
administer it in terms not of the needs of the world but of 
their own profit, and the largest unity they recognize is not 
mankind but one of a welter of rival states. The slogan 
“No More War” is good, yet from one viewpoint it is mis¬ 
leading. We do not now have peace. Life is organized on 
a war basis. Diplomacy is a war game. War itself is only 
the acute manifestation of a chronic disease. We have been 
concerned in this pamphlet with the clash between nations. 
That is not the only source from which war comes. It may 
ultimately prove to be not the chief source of danger. There 
is the growing anger of the brown and black races against 
their white masters and exploiters. There is the clash be¬ 
tween those who own the resources and implements which all 
men need, and those who have only their labor of hand or 
brain to sell. Many of those who claim property rights are 
absentee owners who contribute nothing to the industry on 
which they live, but who exercise power over it. How acute 
is the conflict between them and the workers is illustrated in 
every great strike in the United States and in the smoldering 
fires of civil war in West Virginia coal fields. The world, 
must have peace if civilization can endure. Can the world 
have peace under its present economico-political system? 

Suggested Cures 

The candid militarists answer the question by saying “you 
cannot have peace on any terms.” This philosophy of mad¬ 
ness and despair is offered in the name of common sense. 
Rear Admiral Niblack, whom we have quoted before, after 
arguing that neither the League of Nations nor limitation 
of armaments will bring about peace, asks: 

What can? The answer is, only a change in human nature 
can prevent wars. That, however, being out of the question, 
what is the next best thing? Apparently in the accepted ethics 
of the world a state or business firm can do all things neces¬ 
sary for its own interests and the ordinary rules of morality 
between individuals do not apply to them! The answer is, how¬ 
ever, that we should try to apply the same morality to states 
that we do to individuals. But will nations accept this code 
of morality? If not the only solution is armament.* 

Since the last war proved conclusively the folly of the 
maxim, “If you want peace, prepare for war,” Admiral 


•Niblack: op. cit. p. 149. 


29 



Niblack is really holding out no hope to us save possibly that 
our nation by superrior preparation may survive another war 
to enjoy such advantage as belongs to the sick man in the 
kingdom of the dead. 

There are, however, other more cheerful answers to our 
question. Arbitration treaties, world courts, limitation of 
armaments, popular referendums before declaration of war,— 
all these measures have their advocates. All of them have 
their uses. But if our analysis of the economic root of war 
is sound, no one of them nor all of them together is the axe 
which must be laid at the root of the tree. World courts and 
arbitration treaties may adjust many disputes. They cannot 
cure the fundamental rivalry characteristic of our system. A 
popular referendum might prevent a given war, but so great 
is the power of organized propaganda, so great is the effect 
of fear upon the mob mind, that peoples which allow the 
present rivalries between profit seekers backed by the power 
of their respective nations to continue, cannot be expected to 
be wise or prudent enough to avert disaster when the crash 
is imminent. 

Neither will peace be maintained by a balance of power. 
This is a political device as old as modern Europe. It does 
not touch the economic struggle between classes or between 
nations. It is only a shifting political alliance. What the 
counterpoise of Entente against Triple Alliance could not ac¬ 
complish will not be accomplished by any future balance of 
power. Enthusiasts for the League of Nations as the guardian 
of peace forget that as a part of the morally unjust and econ¬ 
omically preposterous Treaty of Versailles the League was 
scarcely more than a balance of power or an arrangement by 
which the conquerors could maintain their supremacy against 
the world. At best it was political in its outlook and did not 
touch the question of the world-wide organization of raw 
materials and industry for the good of mankind rather than 
for the profit of a few. It did not solve the conflicts in in¬ 
terest between its makers. Thanks to the fact that America 
did not join the League and that the Allies turned to the 
Supreme Council to compose their differences and to enforce 
the most difficult clauses of the peace treaty, the League has 
had a chance to become an organ of nascent internationalism. 
But only after a revision of its constitution and of the peace 


30 


treaties can it become an effective instrument of world co¬ 
operation and hence of world peace.* 

The most thorough-going political, or rather legalistic, pro¬ 
posal for peace is the outlawry of war by agreement between 
states and the submission of all disputes to a world court. 
This notion, developed in some detail in the Knox-Levinson 
plan and recently revived by Senator Borah, is worth working 
for. Its success depends upon deeper forces than political 
enactment. Until in the conscience of mankind the method 
of war is outlawed, until it becomes unthinkable that men 
should organize for the systematic and wholesale destruction 
of their fellows, we shall not be sure of peace. But it is un¬ 
reasonable to suppose that nations and social groups which 
believe it right to grab for themselves those natural resources 
and that economic power upon which the very life of their 
fellows depends will preserve peace simply by refusing to fight. 
Political or economic groups which are willing to exploit or to 
starve their fellows will not be over reluctant to protect their 
privileges by armed violence. War cannot be outlawed as an 
isolated phenomenon, but only as part of a cooperative re¬ 
organization of society. 

Can International Capitalism Prevent War? 

When political devices fail economic readjustment may suc¬ 
ceed in bringing about peace. It has been suggested that in¬ 
ternational capitalism might abolish war. Today internation¬ 
ally minded capitalists are proving themselves wiser than poli¬ 
ticians. But the triumph of international capitalism would 
only intensify the resentment of exploited peoples in Asia and 
Africa and exploited classes in Europe and America. Such a 
triumph is unlikely. Capitalism is now too definitely bound 
up with national interest to give the international capitalists 
full scope. Capitalism has always magnified the idea of com¬ 
petition. Part of the game is to get the better of some one. 
Individuals, corporations and nations have proved over and 
over again that often they would prefer to destroy a rival to 
enjoying greater prosperity by agreement with that rival. 
Europe would be more prosperous today if more lenient terms 
had been imposed upon the conquered States. But the prin¬ 
ciple of nationalistic rivalry proved stronger than wisdom. 

•This point of view with regard to the League is discussed more 
in detail in the author’s address: The League of Nations and the 
Imperialist Principle, published by the Foreign Policy Association, 
N. Y. 


31 



The psychology of the profit system and the acquisitive society 
is not the psychology of peace. 

So orthodox an economist as Professor Seligman realizes the 
impossibility of arranging “an international pact ... so 
that each nation would cheerfully divide its opportunities with 
its neighbors.” He concludes: 

Pacifism seems destined, for the near future at least, to re¬ 
main an unattainable ideal; for it is both blind and deaf to 
the effect of modern capitalism in accentuating, rather tlian 
attenuating, the lure of the economic life. Wars will continue 
until industrial capital has been spread to the uttermost parts 
of the earth . . . then the economic basis will have been 
laid for two supreme events. In the first place, there will no 
longer be any exploitation of the backward countries, because 
there will be no industrially undeveloped countries to exploit. 
Then the whole world will be divided up into a series of 
empires, perhaps a dozen or more, on a level of comparative 
equality economically, and therefore politically. With such a 
relative equality of industrial development, and in the absence 
of any important foreign territory to be exploited, each nation 
will then find it to its interest to develop what is best within 
itself in order to carry on a peaceful exchange of commodi¬ 
ties with the other nations.* 

Professor Seligman does not explain whether when this 
ba PPy day arrives the class conflict will also have been elimi¬ 
nated and a basis of peace founded between capital and labor. 
Still less does he explain how many of us will be alive to enjoy 
his modest Utopia if first we have to survive several more 
wars brought on by the competition of capitalistic nations. 
If “there is no hope of bringing about peace until China and 
India and Africa are as fully supplied with capital as Great 
Britain and Belgium and Germany”—a process which pre¬ 
sumably will involve a repetition in China and India and 
Africa of the painful history of the early days of the Industrial 
Revolution in western lands—we might as well deliver our¬ 
selves over to the tender mercies of the militarists. 

Free Trade as a Solution 

The ardent free trader will scoff at Professor Seligman’s 
postponement of a “peaceful exchange of commodities,” to a 
day of equality of industrial development among nations. Let 
there be an end now to artificial interference with trade and 
ail will be well. Without judging between Professor Seligman 
and the free trader, let us see what the latter’s proposal would 
logically involve on a minimum basis as between capitalist 
nations. 


•Seligman, Economic Interpretations of the War. pp 69 70 

32 



It would mean: (1) The end of protective tariffs and 
export duties; (2) equality of access for investors of all coun¬ 
tries to raw materials under whatever national flag they may 
be; (3) the abolition of artificial interference with sea borne 
traffic by exclusive nationalistic ownership or control of water¬ 
ways like the Dardanelles or the Suez and Panama Canals; 
(4) the end of national subsidies to, or discrimination in favor 
of,' certain shipping lines. 

A program like this might remove the danger of wars between 
the stronger nations over trade and the control of raw materials. 
But the free trader no more than Professor Seligman explains 
how his plan would end the danger arising out of the economic 
strife between possessors and producers. The free trade pro¬ 
gram would not avert wars arising from the anger of countries 
like India or the weaker Latin American nations which have 
little or no capital of their own and cannot accumulate capital 
because of the steady drain of their wealth to pay foreign in¬ 
vestors. The economic power of these investors is usually ac¬ 
companied by a galling measure of political supremacy and 
a more galling display of social superiority. 

In short the widest interpretation of free trade so long 
as it left untouched our present system of private ownership 
would only strike at one group of the economic conflicts which 
endanger peace. And so opposed is this conception of free 
trade to the psychology of a world in which capitalism and 
nationalism are closely interwoven that it is rather more 
Utopian to expect to impose it on our present social organ¬ 
ization than to effect a more fundamental change in which the 
removal of artificial barriers to trade will have its place. 

The One Way of Escape 

There is one way of escape for us. It is the reorganization 
of our whole social system on the basis of production for use 
and not for profit with the needs of the world and not of 
particular nations in view. That is essentially the ideal of the 
workers; it inspires international socialism and urges the inter¬ 
national cooperative movement to a deeper consciousness of its 
own social significance. In these movements is our hope. 

It is not an ideal that will realize itself merely by the work¬ 
ing out of mechanistic forces. The Great War and events sub¬ 
sequent to it have shown that socialism does not automatically 
eliminate partisan controversies and disputes on points of 


33 


dogma rivaling in bitterness the devasting religious disputes 
of the sixteenth and seventeenth centuries. 

Socialism, moreover, and the labor movement generally have 
yet to face more carefully the problem of the relation of the 
industrially advanced peoples to the “backward peoples ” The 
glory of these movements is their internationalism, but merely to 
be a socialist does not exorcise national and racial prejudice.* 
Neither does the machinery for world-wide cooperation in the 
use of raw materials and in industrial processes spring spon¬ 
taneously out of a condemnation of capitalism. Can socialist 
nations federate amicably to bring about a just and efficient 
economic order? There is some precedent in the success of 
the Allies under the desperate exigencies of war in setting up 
an international control of shipping and to a certain extent an 
international apportionment of wheat, wool, coal and sugar.** 

How much hope does that precedent warrant ? The historic 
function of states and the psychological basis of nationalism 
have been far removed from the cooperation essential to the 
preservation of peace. Can they be changed or must we, as 
Scott Nearing suggests in “The Next Step,” ignore existing 
states and build a new social order out of federated organiza* 
tions of producers? Have the consumers’ cooperatives a part 
to play in economic internationalism?! These are some of the 
questions that confront us in trying to think through our prob¬ 
lem. Those who have followed the history of the international 
cooperative movement, or considered the potential significance 
of the International Institute of Agriculture founded by David 
Lubin at Rome, or who remember the interest expressed at 
various times by labor and socialist bodies in a fair administra¬ 
tion of foodstuff sand raw materials on an international basis ft 

will not be hopeless of a solution of these questions. It lies 
beyond the scope of the present pamphlet to do more than 
indicate their nature and importance. 

So, too, does it lie beyond the scope of this pamphlet to deal 


States and Great Britain," especially pp. H6 117 208 

Woolf: International Co-operative Trade - Fabian 
T ?+qJ??« 201 f0r i a suggestive discussion on this point ’ Fabian 

cor ( fre„« iSX P iprta| P oTm d 8. ngS °' ^ A '“ ed Lab0r and Soclallat 


34 



at length with that other great question: how can we prevent 
war save by a revolution which in itself will involve war? 
The communists, the most militant wing of socialists, generally 
believe that such a revolution must come. They are against 
pacifism not because they love violence but because they see 
no other way to get lasting peace. Many of them believe that 
“the second World War will be the first World Revolution.” 
Such a belief, as we have previously pointed out, is made by 
the nature of modern war a counsel of despair. More than 
that, it does too little justice to the possibilities of “non-violent 
coercion” as a method of constructive revolution. 

The repudiation of violence by individuals in obedience to re¬ 
ligious conviction is old; its social application is new. Yet it 
is by the strike rather than the sword that labor has won its 
victories. It is by the general strike that European labor at 
the great Hague Conference last December resolved to oppose 
a new outbreak of international war.* It is by non-coopera¬ 
tion rather than violent revolt that India inspired by Gandhi 
has made its marvelous progress toward unity and freedom. 
More than India or labor has yet accomplished we men of all 
races must accomplish to rid the world of war. But with such 
examples before us it is impossible to despair of man’s achiev¬ 
ing a task of social engineering in the cause of peace somewhat 
analogous to his achievements in the physical world. Thus to 
win peace will be difficult, but to win happiness and well-being 
without peace is impossible. 

The Challenge 

The first step is to challenge men to look at the present social 
order and then to say by what miracle they expect to maintain 
the hatreds, the injustice, the waste inherent in a profit system 
which knows no higher loyalty than is imposed by competitive 
states and yet escape the catastrophic destruction of new war. 
The answer to the challenge will be given neither by futile 
sentimentalists nor cynical materialists but by those who stand 
ready to pay the price of peace in thought, in organization, 
and in action. 

♦This conference also ma.de wise recommendations on the teach¬ 
ing of history so as to promote international friendship rather than 
hate; it favored steps toward disarmament and demanded the aboli¬ 
tion of private manufacture of arms. An excellent summary of its 
proceedings may be found in the February issue of the Locomotive 
Engineers Journal. 


35 



BIBLIOGRAPHY 


This particular bibliography is selected out of a great range 
of literature chiefly because the books cited in one way or an¬ 
other amplify or explain positions taken in the pamphlet. On 
the tremendously important subject of the development of 
American imperialism there is no satisfactory book in exist¬ 
ence. We need a research bureau which will devote its atten¬ 
tion to American economic penetration of Latin America. The 
Nation is the best current source of information on the subject. 

There is no one satisfactory book on the diplomatic origins 
of the last war. This defect will probably be remedied in the 
near future. It is understood that Prof. Sidney B. Fay of 
Smith College is working on such a book. Shorter studies of 
his which have already appeared raise high hopes for it. 

In listing books I have added an explanatory sentence in 
cases where either the title or the general fame of the book 
may not be sufficiently indicative of its nature. 

Angell, Norman, “The Great Illusion,’’ (Putnam’s, 1913); 

“The Fruits of Victory,” (Century, 1921). 

Beard, Chas. A., “Cross Currents in Europe Today,” (Mar¬ 
shall Jones Company, 1921). 

Boudin, L. B., “Socialism and War,” (New Review Publishing 
Co., 1916). 

Brailsford, H. N., “War of Steel and Gold,” (Bell & Sons, 
London, 1914); “After the Peace,” Leonard Parsons, Lon¬ 
don, 1920). 

Case, C. M., “Non-Violent Coercion,” (Century Co., 1923). 
Dickinson, G. Lowes, “Causes of War,” (Allen & Unwin, Lon¬ 
don, 1922). 

Hobson, John A., “Democracy After the War,” (Allen & Un¬ 
win, London, 1917). A very valuable study of the devices 
employed and the lengths to which men will go to defend 
* ‘ improperty. ’ ’ 

Howe, Frederic C., “Why War?” (Scribner, 1916). 

Keynes, J. M., “The Economic Consequences of the Peace,” 
(Harcourt Brace & Co., 1920); “A Revision of the Treaty,” 
(Harcourt Brace, 1922). 

Lorebum, Robert T. R., “How the War Came,” (Methuen, 
London, 1919). 

Nearing, Scott, “The American Empire,” ( The Rand School, 
1921). 


Russell, Bertrand, “Why Men Fight/’ (Century Company, 
1917). 

Turner, John Kenneth, “Shall It Be Again?” (Huebsch, 1922). 
Webb, Sidney and Beatrice, “The Decay of Capitalist Civiliza¬ 
tion/ ’ (Harcourt Brace & Co., 1923). 

Woolf, Leonard, “Empire and Commerce in Africa/’ (Allen & 
Unwin, London, 1920). One of the most valuable concrete 
studies of the working of economic imperialism together with 
constructive suggestions as to what might be done. “Eco¬ 
nomic Imperialism/’ (Harcourt Brace & Co., 1920). A con¬ 
venient handbook. 

Other important books by Morel, Nitti, Loria, Salter, Selig- 
man, Rai, and others are referred to in the footnotes. 


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